The Supreme Court in COMPETITION COMMISSION OF INDIA V KERALA FILM EXHIBITORS FEDERATION & ORS., 2025 has upheld the Competition Commission of India’s (CCI) imposition of penalties on the Kerala Film Exhibitors Federation (KFEF) and its officers including P.V. Basheer Ahmed (President, KFEF) and M.C. Bobby (General Secretary, KFEF) for carrying out anti-competitive practices.
The Court rejected the Competition Appellate Tribunal’s (COMPAT) order that had set aside penalties imposed on the individuals on procedural grounds, particularly for lack of a second show cause notice specifically about the penalty.
The key issue for consideration before the bench was whether the notice issued by the appellant (CCI) to the respondents on June 10, 2015, constituted sufficient notice and whether these respondents were entitled to a second show cause notice proposing the imposition of penalties under Section 27 of the Competition Act, 2002.
The Supreme Court bench comprising Justice Manoj Misra and Justice K.V. Viswanathan delivered the judgment restoring the Competition Commission of India’s penalties on the KFEF.
In its judgment the Supreme Court held, “No mandate in the statute exists for the issuance of a second show cause notice setting out the proposed penalty.”
In this case, since the Commission agreed with the Director General’s report, the notice issued on June 10, 2015, under regulations 21 read with regulations 22 and 48, and Section 26 of the Act sufficiently complied with the legal requirements for imposing a penalty under Section 27 of the act.
“We do not find that the penalty is disproportionate. The monetary penalty was meagre. The acts committed had serious and deleterious effect on the informant and the general public and unless deterrent 65 penalties were imposed prejudice to public would have been enormous. The penalty imposed, as above, cannot be said to be of such a nature as to shock the conscience of a judicially trained mind,” the apex court said.
“A behavioural remedy like the one ordered in the present case would alone protect the interest of the consumers and uphold the majesty of law,” it said.
The case originated from complaints that KFEF and its officers had threatened film distributors with a boycott if their films were screened at Crown Theatre. The CCI investigation, conducted by its Director General (DG), found that KFEF had violated Section 3(1) read with Section 3(3)(b) of the Competition Act, 2002, engaging in a coordinated boycott restricting film exhibition.
The CCI argued that forwarding the DG’s investigative report along with a notice dated June 10, 2015, seeking replies and income details and fixing a hearing date, adequately fulfilled legal and natural justice procedures. It contended that the Act does not mandate a separate show cause notice for penalties.
KFEF contended that imposing penalties and debarments without a specific separate penalty notice violated natural justice principles and their rights under Article 19(1)(c) of the Constitution. The respondents also argued that penalties were disproportionate and unduly restrictive.
The Supreme Court finally restored the CCI’s 2015 penalty order imposing monetary penalties equivalent to 10% of the average income or turnover on KFEF, Mr. Basheer Ahmed, and Mr. Bobby.
Additionally, a two-year ban is imposed on the two individuals from associating with KFEF’s management and governance, effective December 1, 2025.
